Correlation Between Ford and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Ford and Samsung SDI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Samsung SDI, you can compare the effects of market volatilities on Ford and Samsung SDI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Samsung SDI.
Diversification Opportunities for Ford and Samsung SDI
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Samsung is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Ford i.e., Ford and Samsung SDI go up and down completely randomly.
Pair Corralation between Ford and Samsung SDI
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.84 times more return on investment than Samsung SDI. However, Ford Motor is 1.19 times less risky than Samsung SDI. It trades about 0.01 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.07 per unit of risk. If you would invest 1,143 in Ford Motor on August 28, 2024 and sell it today you would lose (3.00) from holding Ford Motor or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.03% |
| Values | Daily Returns |
Ford Motor vs. Samsung SDI
Performance |
| Timeline |
| Ford Motor |
| Samsung SDI |
Ford and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Samsung SDI
The main advantage of trading using opposite Ford and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Samsung SDI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Samsung SDI will offset losses from the drop in Samsung SDI's long position.The idea behind Ford Motor and Samsung SDI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Samsung SDI vs. Korea Real Estate | Samsung SDI vs. Korea Ratings Co | Samsung SDI vs. IQuest Co | Samsung SDI vs. Wonbang Tech Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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